Airlines Ancillary Fees Topped $36 Billion in 2012

Airline revenue from ancillary fees reached an estimated $36.1 billion worldwide in 2012, according to the Amadeus Worldwide Estimate of Ancillary Revenue. The forecast projects an 11.3 percent increase, or more than $3.6 billion in new receipts.

The estimates are based on research done earlier this year by Amadeus and IdeaWorksCompany which studied the ancillary revenue disclosed by 50 airlines for 2011. These statistics were applied to a larger list of 176 airlines to project a global estimate of ancillary revenue activity by the world’s airlines in 2012.

Ancillary revenue is generated beyond the core airline business of moving passengers from A to B. This wide range of activities includes: commissions gained for hotel bookings, the sale of frequent flyer miles to partners and the extras customers buy directly from the carriers, such as bag fees and seat upgrades.

US major airlines account for a significant share of global ancillary revenue. Over a third of the total global ancillary revenue, $12.4 billion, is generated by just six airlines: Alaska Airlines, American, Delta, Hawaiian, United and US Airways. According to IdeaWorksCompany, the majority of ancillary revenue for US major airlines is likely to come from the sale of frequent flier miles, notably those linked to airline credit cards. Baggage fees for US carriers represent approximately 20 percent of their ancillary receipts.

North America continues to lead all other regions in ancillary revenues, due to its large market size and how thoroughly airlines have embraced ancillary revenue methods. Ancillary activity elsewhere in the world is projected to see significant increases ranging from 11.7 percent for Europe to 30.2 percent for Latin America and the Caribbean.

The Amadeus Worldwide Estimate of Ancillary Revenue marks the third year Amadeus and IdeaWorksCompany have offered estimates of global ancillary revenue activity.